Credit Checks: Hard Pull vs. Soft Pull
By Danielle Buffardi

Have you ever received a “pre-approval” advertisement in the mail for a credit card that you don’t have yet? Or perhaps you’re about to rent a new apartment and the landlord tells you he wants to run a credit check to make sure that you are capable of paying your bills. You’re thinking how all these checks to your credit are going to affect it. There are two types of “pulls” when it comes to your checking your credit score, a hard pull and a soft pull. Let’s discuss further the difference between the two.

SOFT PULL: Companies can do what’s called a soft pull on your credit to determine if you would be a good candidate to become a member. Big companies like mortgage lenders, banks, and credit card companies can all do a soft pull on your credit history to see if they can pre-qualify you for their services. These soft pulls don’t affect your credit score negatively as they normally will not show up on your credit report. Your landlord, place of employment, or self checking of credit reports all qualify as “soft pulls” and are relatively harmless to your score. That doesn’t mean, of course, that you should let just anyone run your credit. You won’t always be notified that companies are doing soft pulls on your credit report, think of that pre-approval letter from the credit card company. This is normally no cause for alarm as these soft pulls often go undetected on your credit report. But it does mean that you should keep as close a watch as possible as to who you give permission to run your credit report, as we’ll talk about next, some credit checks do affect your overall score and can stay on your report for quite some time.

HARD PULL: A hard pull on your credit report, however, does affect your overall credit score. These types of pulls are done when you open a new credit card or receive a loan of any kind. Too many of these hard pulls can significantly decrease your credit score and have negative affects on future attempts to use your credit in favor of whatever it is you plan on purchasing.

A hard pull can deduct up to five points from your credit score and remain on your report for up to six months. It is of the utmost importance that you read all the fine print of the literature that you are signing giving permission for a company to pull your credit score and if you don’t see the details of the pull (hard or soft) that the company is intending on doing then simply ask. You always have the right to know why a company is checking your credit score.

It is also a good idea to periodically check your credit report at least once a year. If you do a Google search for “free credit report” many options will turn up and you can explore them to find the one that works right for you.

Hard Pulls vs. Soft Pulls & Balance Transfer Applications: If you receive a pre-approved balance transfer offer by mail, the information that identified you as a potential applicant likely resulted via a soft pull on your credit report. Banks, or anyone else for that matter, are not permitted to perform hard pulls without your consent. If you act on the promotional deal or if you apply for a balance transfer credit card online, you are giving the financial institution permission to perform a hard pull.

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